TaxTMI 
TaxTMI 
2018 (5) TMI 1150
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....ng penalties of Rs. 26,67,334/- and Rs. 55,19,695/-; respectively, in proceedings u/s 271C of the Act. Heard both the parties. Case files perused. 2. It is evident from perusal of the Revenue's pleadings in all four cases that former two appeals involve quantum and latter as many cases pertain to consequential penalty proceedings on identical facts and circumstances. We thus treat Revenue's first appeal in ITA No.700/Kol/2016 as that the lead case. 3. The Revenue's above lead case raises the following substantive grounds:- "1. That under the facts & circumstances of the case the CIT(A) has erred in holding that the payment of last mile charges are analogous to payment of rent and therefore applicable TDS is u/s. 194I. The payment is covered under the definition of royalty as per Explanation 2(iva) below Section 1(vi) and applicable provision of TDS is u/s 194J. 2. That under the facts and circumstances of the case the CIT(A) has erred in holding that the charges paid for bandwidth for protection is liable to deduction of tax at source u/s. 194C. He has misunderstood that the payment is not covered under definition of payment made for a "process" as explai....
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....i HC)]. In the former case of the Kolkata Tribunal uses of transmission lines for the purpose of roaming was not held hit by section 194C or Section 1941 or Sec.194J of the Act. In the latter case lease of transponder capacity of satellites for the transport of data through satellite was not held as the services taxable as royalty. Later in the course of drafting of order a letter dated 22.1.2016 was received from the appellant on Last Mile Charge, Bandwidth for protection and interconnectivity charges. Its content on Last Mile Charge is produced as under: Last Mile charge:"The assessee had explained the nature of this payment vide its letter dated s" January,2016 as under: It is basically hiring of one pair of Optical Dark Fiber to provide last mile end connectivity at customer's premises from Railtel's POP to customers POP through which RaiItel carries its own Bandwidth/Internet bandwidth. It is hired as and when required basis and once the services is discontinued, the hired fibre is also surrendered. We have now discussed this issue with our technical department and their further explanation is as under: i) Last Mile Charges refer for....
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....Coachin Bench Kerala Vision Limited v ACIT, 46 taxmann.com 50, iv) RajasreeMotors(P) Ltd v. ACIT, 61 Taxmann. Cam 270(ITAT Cochin). This ground, therefore, has to be allowed. 5. Bandwidth for protection: The AO has applied 10% u/s. 194J as against the appellant's application of deduction 's order is not clear about the nature of services in return for which payment was made and which was termed as Bandwidth for protection. In the appellant's submission dated 5.1.2016 on page-13 the Bandwidth for protection has been defined as under:- "It is hiring of Bandwidth from other telecom operators to protect our customers' circuits which are on linear route. Basically Telco delivers Bandwidth from their PoP to Railtel's PoP and from their Railtel makes it's protection path through it's own network' "From the above definition it is not clear what ha been hired by the appellant deductor from other telecom operators. It talks of protection path being provided by Railtel through its own network and some linear routes consisting of the appellant's customers' circuits. Further submission dated 22.1.2016 in so far as it applies to Bandwidth for....
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....er, to cover the interconnection/network usage cost.' The issue is covered by the case of Vodafone East Limited vs ACIT (in ITA No.1864/Kol/2012 dated 15.9.2015) which has been decided for roaming charge consisting of interconnectivity and use of transmission lines. Interconnection / Network usage charge is standard facility involving no human intervention. As discussed above, amendment by the Finance Act, 22012 will have no effect in the years under consideration, which precede the coming into effect of the Finance Act 2012 and liability to tax (TDS) cannot be made retrospective. As it has been decided, only when the amounts are paid or credited, the decision to deduct has to be taken as per law then being in effect. This ground is required to be allowed." 5. We have given our thoughtful consideration to rival submissions. Learned Departmental Representative vehemently contends during the course of hearing that the assesssee's impugned payments pertaining to the first issue of last mile charges are liable for TDS deduction as fee for professional / technical services rather than rent u/s 194I of the Act. It quotes Section 9(1)(vi) Explanation -2 (iva) of the A....